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Trading and Investment Terms

Net Domestic Product (NDP)

Net domestic product (NDP) is an annual measure of the financial yield of a country that is balanced to account for depreciation costs. To calculate NDP subtract depreciation from the gross domestic product (GDP).

 

Net domestic product (NDP) represents capital that has been consumed over the fiscal year. The depreciation accounted for represents the capital needed to replace depreciated assets. For example: Machine repair costs fall into the category of depreciation.

 

The Bureau of economic analysis (BEA), reports the GDP and NDP on a quaterly basis.

 

An increase in NDP would be a sign of developing economic stagnation, while a decrease in NDP would signify ongoing economic health.

 

In spite of the fact that the GDP is often cited when surveying the financial health of a country, NDP provide a point of view that shows the pace at which capital resources degrade and require repair or replacement. Inability to do would bring about a diminishing to the nation's GDP.

 

The recurrence and extent of such replacements can vary by the sort of capital resources. Machinery that is put to standard use may require parts replaced consistently until the whole machine becomes no longer usable.

 

While that may take numerous years, barring unforeseen damages or defects, there is a pattern of machine failure and replacement.

 

A part of the machinery in a production plant’s manufacturing line may need a replacement, while another s arrangement of comparable machines continue to work within the same plant.

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